Question
36:
Calculate Debt to Equity Ratio: Equity Share Capital ` 5,00,000; General Reserve ` 90,000; Accumulated Profits ` 50,000; 10% Debentures ` 1,30,000; Current Liabilities ` 1,00,000.
Answer:
Equity = Equity Share Capital + General Reserve + Accumulated Profits
= 5,00,000 + 90,000 + 50,000 = 6,40,000
Debt = 10% Debentures = 1,30,000
Debt equity ratio= Debt
/equity=1,30,000/6,40,000=0.203:1
Question
37:
From the following information, calculate Debt to Equity Ratio:
|
|
` |
|
10,000 Equity Shares of ` 10 each fully paid |
2,00,000 |
|
5,000; 9% Preference Shares of ` 10 each fully paid |
1,00,000 |
|
General Reserve |
90,000 |
|
Surplus, i.e., Balance in Statement of Profit & Loss |
40,000 |
|
10% Debentures |
1,50,000 |
|
Current Liabilities |
1,00,000 |
Note: Either Number of
shares or Price of par share is wrongly printed in the book, either of both
must have been changed.
Answer:
Long-Term
Debt = Debentures = ` 1,50,000
Shareholder’s Funds = Equity Share Capital + Preference Share Capital + General
Reserve + Surplus
= ` 2,00,000 + ` 1,00,000 + ` 90,000 + `40,000 = ` 4,30,000
Debt-equity ratio= Long-Term
Debt /Equity = 1,50,000/4,30,000 = 0.35:1
Question
38:
Capital Employed `8,00,000; Shareholders' Funds `2,00,000. Calculate Debt to Equity Ratio.
Answer:
Shareholders’ Funds = 2,00,000
Capital Employed = 8,00,000
Long- Term Debts = Capital Employed − Shareholders’ Funds
= 8,00,000 − 2,00,000 = 6,00,000
Debt equity ratio= Long-term Debt
/equity=6,00,000/2,00,000=3:1
Question
39:
Balance Sheet had the following amounts as at 31st March, 2021:
|
|
` |
|
|
` |
|
10%
Preference Share Capital |
5,00,000 |
|
Current
Assets |
12,00,000 |
|
Equity
Share Capital |
15,00,000 |
|
Current
Liabilities |
8,00,000 |
|
Securities
Premium Reserve |
1,00,000 |
|
Investments
(in other companies) |
2,00,000 |
|
Reserves
and Surplus |
4,00,000 |
|
Fixed
Assets-Cost |
60,00,000 |
|
Long-term
Loan from IDBI @ 9% |
30,00,000 |
|
Depreciation
Written off |
14,00,000 |
Calculate ratios indicating the Long-term and the Short-term financial position of the company.
Answer:
(i) Debt-Equity Ratio is an
indicator of Long-term financial health. It shows the proportion of Long-term
loan in comparison of shareholders’ Funds.
Debt-Equity Ratio = Long Term Debts/Equity
Debt = Loan from IDBI @ 9% = 30,00,000
Equity = 10% Preference Share Capital + Equity Share Capital + Reserves & Surplus
= 5,00,000 + 15,00,000 + 4,00,000 = 24,00,000
Debt-Equity Ratio = 30,00,000/24,00,000 = 1.25:1
(ii) Current Ratio is an indicator of short-term financial
portion. It shows the proportion of Current Assets in comparison of Current
Liabilities.
Current Ratio = Current Assets/Current Liabilities
Current Assets = 12,00,000
Current Liabilities = 8,00,000
Current Ratio = 12,00,000/8,00,000 = 1.5:1
Note: In the above question, Securities Premium Reserve is not considered while computing Equity because it is already included in the amount of Reserves and Surplus.
Question
40:
Calculate Debt to Equity Ratio from the following information:
|
|
` |
|
|
` |
|
Fixed
Assets (Gross) |
8,40,000 |
|
Current
Assets |
3,50,000 |
|
Accumulated
Depreciation |
1,40,000 |
|
Current
Liabilities |
2,80,000 |
|
Non-current
Investments |
14,000 |
|
10%
Long-term Borrowings |
4,20,000 |
|
Long-term
Loans and Advances |
56,000 |
|
Long-term
Provisions |
1,40,000 |
Answer:
|
Debt |
= |
Long Term Borrowings+Long Term Provisions |
|
|
= |
4,20,000+1,40,000 =
` 5,60,000 |
|
|
|
|
|
Equity |
= |
Total Assets - Total Debts |
|
|
= |
(8,40,000 -1,40,000+14,000+56,000+3,50,000) - (4,20,000 -1,40,000 -2,80,000)=
` 2,80,000 |
|
|
|
|
|
Debt to Equity Ratio |
= |
Debt/Equity |
|
|
= |
5,60,000/2,80,000=2:1 |
Class : 12th | Ts Grewal solution 2022-2023
Volume 3 | Chapter 4: Accounting Ratio
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